PART 2. Conflict of Interest. MSK continued & top executives at the University of Maryland Medical System have resigned amid investigations into accusations of self-dealing among the hospital network’s board members

ASSIGNMENT: Identify other health care conflicts in the news then identify Best Practices of Boards of Trustees.

New PART 2 after old PART 1.


ASSIGNMENT: Profile the University of Maryland Medical System COI challenge.

DISCLOSURE. I am a member and Interim Chairman of the IRB* at Stevens Institute of Technology.

“There are many varieties of conflicts of interest, and they appear in different settings and across all disciplines. While conflicts of interest apply to a “wide range of behaviors and circumstances,” they all involve the use of a person’s authority for personal and/or financial gain. Conflicts of interest may involve individuals as well as institutions. Furthermore, individuals, in certain circumstances, may have conflicts occurring on both an individual and an institutional level, as may be seen among members of an Institutional Review Board (IRB).

Conflicts of interest are broadly divided into two categories: intangible, i.e., those involving academic activities and scholarship; and tangible, i.e., those involving financial relationships.” (A)

“In an article in the May 2014 issue of Compliance Today, Bill Sacks, Vice President and co-founder of HCCS, a HealthStream company, describes how new NIH regulations are forcing academic medical centers (AMCs) to examine and update their conflict-of-interest policies. He lists the 15 best practices for management of conflicts of interest that have been proposed by the Pew Charitable Trust and discusses how some of these recommendations are enjoying wide acceptance, as others are being met by serious objections. The Pew “Best Practice” recommendations are summarized below.

1. No gifts or meals should be accepted from industry sales representatives…

2. Faculty must disclose all conflicts of interest. All academic medical centers must have a process in place to manage conflict of interest (COI) disclosures.

3. Industry-funded speaking should not be allowed…

4. Industry-funding of continuing medical education (CME) should be severely limited or prohibited…

5. Faculty, students, and trainees should not attend industry-supported promotional or educational events…

6. Limit or prohibit pharmaceutical sales representative access in academic medical centers…

7. Limit medical device representative presence in academic medical centers to what is necessary…

8. Conflict-of-interest education should be required for all clinical staff and students

9. Conflict-of-interest policies should apply to everyone with a relationship to the academic medical center—paid, volunteering, affiliated, etc…

10. Industry-supported clinical fellowships should be available for scientific training only…

11. Ghostwriting and honorary authorship are strictly prohibited…

12. …Consulting arrangements must require written contracts with clear deliverables, to ensure that inappropriate payments are not involved…

13. Consulting relationships for marketing purposes are prohibited.

14. Pharmaceutical samples can be accepted and used only when they don’t become marketing tools.

15. Members of pharmacy and therapeutics committee cannot vote on formulary or treatment changes involving a company or product in which they have a financial interest… (B)

“Open Payments gives the public more information about the financial relationships between physicians and teaching hospitals and applicable manufacturers and GPOs. Specifically, the program:

Encourages transparency about these financial ties

Provides information on the nature and extent of the relationships

Helps to identify relationships that can both lead to the development of beneficial new technologies and wasteful healthcare spending

Helps to prevent inappropriate influence on research, education and clinical decision making. (C)

“Community Catalyst offers this Policy Guide to Academic Medical Centers and Medical Schools to assist leaders, faculty, staff and medical students in successfully adopting and improving policies to address conflicts of interest and interactions with the pharmaceutical and device industries. Policies such as these and their effective implementation are of critical importance to the integrity of medical education and patient care…

Toolkit on Transparency and Disclosure. Toolkit on Relations with Sales Representatives. Toolkit on Promotional Speaking. Toolkit on Continuing Medical Education. Toolkit on Ghostwriting and Name-Lending. Toolkit on Samples. Toolkit on Pharmaceutical and Therapeutics Committees. Toolkit on COI Policy Implementation. Conflict of Interest Curriculum Toolkit (D)

“Papers in medical journals go through rigorous peer review and meticulous data analysis.

Yet many of these articles are missing a key piece of information: the financial ties of the authors.

Nearly two-thirds of the 100 physicians who rake in the most money from 10 device manufacturers failed to disclose a conflict of interest in their academic writing in 2016, according to a study published Wednesday in JAMA Surgery.

The omission can have real-life impact for patients when their doctors rely on such research to make medical decisions, potentially without knowing the authors’ potential conflicts of interest…

They did this by sampling 10 large surgical and medical device manufacturers. This list includes Medtronic, Stryker Corp., Intuitive Surgical, Covidien, Edwards Lifesciences Corp., Ethicon, Olympus Corp., W.L. Gore & Associates, LifeCell Corp. and Baxter Healthcare.

The researchers also pinpointed the 10 physicians who received the highest compensation from each company. They then searched for articles published by these physicians between Jan. 1 and Dec. 31, 2016, and reviewed the full text of each article for COI disclosure.

According to their findings, those 10 companies paid more than $12 million in 2015 to the 100 doctors included in the study. The median payment to these physicians was $95,993.” (E)

“Memorial Sloan Kettering Cancer Center launched a conflict of interest task force in the wake of the resignation of its chief medical officer, Dr. José Baselga, who failed to disclose connections to medical industry…

The Manhattan-based cancer center said the task force will assess its internal policies and processes for reporting and managing outside activities and industry-supported clinical trials.

The task force was announced by President and Chief Executive Officer Dr. Craig Thompson. It will be chaired by Debra Berns, MSK’s Senior Vice President and Chief Risk Officer.

Among its objectives, the task force will: Review MSK’s policies, procedures, and training on conflicts of interest; Identify best practices in COI, including monetary and commitment limits; Assess new or improved processes to support timely and thorough disclosure; Identify medical societies and journals with whom to partner in improving public disclosure at meetings and in publications. (F)

“One of the world’s top breast cancer doctors failed to disclose millions of dollars in payments from drug and health care companies in recent years, omitting his financial ties from dozens of research articles in prestigious publications like The New England Journal of Medicine and the Lancet.

The researcher, Dr. José Baselga, a towering figure in the cancer world, is the chief medical officer at Memorial Sloan Kettering Cancer Center in New York. He has held board memberships or advisory roles with Roche and Bristol-Myers Squibb, among other corporations; has had a stake in start-ups testing cancer therapies; and played a key role in the development of breakthrough drugs that have revolutionized treatments for breast cancer.

According to an analysis by ProPublica and The New York Times, Baselga did not follow financial disclosure rules set by the American Association for Cancer Research when he was president of the group. He also left out payments he received from companies connected to cancer research in his articles published in the group’s journal, Cancer Discovery. At the same time, he has been one of the journal’s two editors in chief.

At a conference this year and before analysts in 2017, he put a positive spin on the results of two Roche-sponsored clinical trials that many others considered disappointments, without disclosing his relationship to the company. Since 2014, he has received more than $3 million from Roche in consulting fees and for his stake in a company it acquired.” (G)

“Dr. José Baselga, the chief medical officer of Memorial Sloan Kettering Cancer Center, resigned on Thursday amid reports that he had failed to disclose millions of dollars in payments from health care companies in dozens of research articles…

Thompson echoed comments he made to the hospital staff on Sunday, saying that the cancer center had “robust programs” in place to manage employees’ relationships to outside companies, but that “we will remain diligent.” He added, “There will be continued discussion and review of these matters in the coming weeks.” (H)

“An artificial intelligence start-up founded by three insiders at Memorial Sloan Kettering Cancer Center debuted with great fanfare in February, with $25 million in venture capital and the promise that it might one day transform how cancer is diagnosed.

The company, Paige.AI, is one in a burgeoning field of start-ups that are applying artificial intelligence to health care, yet it has an advantage over many competitors: The company has an exclusive deal to use the cancer center’s vast archive of 25 million patient tissue slides, along with decades of work by its world-renowned pathologists.

Memorial Sloan Kettering holds an equity stake in Paige.AI, as does a member of the cancer center’s executive board, the chairman of its pathology department and the head of one of its research laboratories. Three other board members are investors…

Hospital pathologists have strongly objected to the Paige.AI deal, saying it is unfair that the founders received equity stakes in a company that relies on the pathologists’ expertise and work amassed over 60 years. They also questioned the use of patients’ data — even if it is anonymous — without their knowledge in a profit-driven venture.” (I)

“…The AAMC is continuing to work with member institutions, other associations and societies, journals, and the continuing education community to develop tools and resources to help institutions and individuals manage the disclosure of conflicts of interest.

Institutions looking for immediate steps to take could:

Remind faculty of the importance of full disclosure, not only to your institution, but in other writing, speaking and teaching situations, as well as grant applications.

Use relevant current events as an opportunity to recommit to the institution’s obligation to facilitate transparency about the ways in which faculty and industry may be collaborating, and the processes that are in place to review and manage those relationships.

Encourage faculty to review the information posted about them publicly on the Open Payments website, and to ensure its accuracy as well as consistency with complete disclosures in all aspects of their professional responsibilities.” (J)

* “Under FDA regulations, an IRB is an appropriately constituted group that has been formally designated to review and monitor biomedical research involving human subjects. In accordance with FDA regulations, an IRB has the authority to approve, require modifications in (to secure approval), or disapprove research. This group review serves an important role in the protection of the rights and welfare of human research subjects.

The purpose of IRB review is to assure, both in advance and by periodic review, that appropriate steps are taken to protect the rights and welfare of humans participating as subjects in the research. To accomplish this purpose, IRBs use a group process to review research protocols and related materials (e.g., informed consent documents and investigator brochures) to ensure protection of the rights and welfare of human subjects of research.” (K)

“A vice president of Memorial Sloan Kettering Cancer Center has to turn over to the hospital nearly $1.4 million of a windfall stake in a biotech company, in light of a series of for-profit deals and industry conflicts at the cancer center that has forced it to re-examine its corporate relationships…

The move to hand over his stake is one of several steps now underway as the cancer center tries to contain a crisis that has already led to the resignation of its chief medical officer and a review of its conflict-of-interest policies. Several board members and some executives of the nonprofit institution have maintained close ties to the health and drug industries at a time when stunning cancer breakthroughs are generating excitement among investors and spawning a flurry of biotech startups.

At other cancer centers and research institutions, employees are barred from accepting personal compensation when they represent their institution on corporate boards. But Memorial Sloan Kettering had no such prohibition until now.” (L)

PART 2. Conflict of Interest continued. Memorial Sloan Kettering/ University of Maryland Medical System

“In forging partnerships with a New Jersey hospital and a data analytics startup, Memorial Sloan Kettering Cancer Center has created a web of interlocking financial interests and conflicts that, ethics experts told STAT, raise doubts about whether the prominent New York City hospital can always put its patients’ interests first while using information in their medical records to make money.

In late 2016, Memorial Sloan Kettering signed a deal with Hackensack Meridian Health, one of New Jersey’s largest hospital systems, giving the cancer center access to a larger pool of patients and a bulwark against encroaching competition from other national players in cancer care.

Within a year, MSK launched another collaboration with a data analytics startup called Cota, and invested $1.4 million in the company. Its founder: a Hackensack Meridian executive and oncologist named Dr. Andrew Pecora, who was Hackensack’s lead negotiator in striking the blockbuster 2016 partnership and serves on the board overseeing the hospitals’ joint venture…

The cancer center is also collaborating with IBM in the development and sale of Watson for Oncology, a product that combines its clinical expertise with artificial intelligence to deliver cancer treatment recommendations. The cancer center receives royalties on the sale of IBM’s product.

Ethics experts said these deals fall into a regulatory gray area in which hospitals and other private companies are trading on patient data in novel ways that may cross ethical lines and trigger a backlash among patients.”  (A)

“Hundreds of doctors packed an auditorium at Memorial Sloan Kettering Cancer Center on Oct. 1, deeply angered by revelations that the hospital’s top medical officer and other leaders had cultivated lucrative relationships with for-profit companies.

One by one, they stood up to challenge the stewardship of their beloved institution, often to emotional applause. Some speakers accused their leaders of letting the quest to make more money undermine the hospital’s mission. Others bemoaned a rigid, hierarchical management that had left them feeling they had no real voice in the hospital’s direction.

“Slowly, I’ve seen more and more of the higher-up meetings happening with people who are dressed up in suits as opposed to white coats,” said Dr. Viviane Tabar, chairwoman of the neurosurgery department.

“The corporatization of this institution is clear to many of us who have been here a long time,” said Dr. Carol L. Brown, a gynecologic cancer surgeon, according to an audio recording of the meeting.

The meeting ended after several doctors advocated an immediate no-confidence vote in the hospital’s senior leadership. The turmoil followed reports by The New York Times and ProPublica that the hospital’s chief medical officer, Dr. José Baselga, had been paid millions by drug and health care companies and failed to disclose those ties more than 100 times in medical journals, and that hospital insiders had made lucrative side deals that stood to earn them handsome profits, sometimes for work they had done on the job.

The day after the meeting, the hospital’s chief executive, Dr. Craig B. Thompson, promised greater openness with rank-and-file doctors about decision-making. He also committed to doing the “root-cause analysis” requested by the doctors of how “egregious conflicts of interest,” as one physician put it, had been allowed to happen…

The predicament of Memorial Sloan Kettering also reflects a shift in its own culture. Its prior chief executive, Dr. Harold E. Varmus, a Nobel-prize winning scientist, personally kept companies at arm’s length, while Dr. Thompson, also a respected cancer researcher, has more fully embraced such relationships. The new approach has been applauded by some for expanding access to the cancer center’s discoveries, even as others have worried that the hospital may be losing sight of its mission…

Even as Memorial Sloan Kettering leaders have promised greater transparency, they have engaged a public affairs firm, SKDKnickerbocker, to manage their message and have aggressively pushed back against the idea that the hospital’s leaders are too close to industry.” (B)

“Memorial Sloan Kettering Cancer Center, one of the world’s leading research institutions, announced on Friday that it would bar its top executives from serving on corporate boards of drug and health care companies that, in some cases, had paid them hundreds of thousands of dollars a year.

Hospital officials also told the center’s staff that the executive board had made permanent a series of reforms designed to limit the ways in which its top executives and leading researchers could profit from work developed at Memorial Sloan Kettering, a nonprofit with a broad social mission that admits about 23,500 cancer patients each year.” (C)

“While MSK’s situation has drawn the most attention for its ties to industry, leaders of nonprofit health systems commonly lead pharmaceutical companies at the same time, a BioPharma Dive review from November found.

From that analysis, about two-thirds of the industry’s largest drugmakers had at least one board member who was also leading a nonprofit, creating a potential financial conflict of interest between the two roles.

The typical compensation package from the pharma companies to these directors was worth more than $475,000, while the average director also held roughly $1.7 million in stock of the particular drugmaker they helped to lead.

This MSK memo from Debra Berns, the cancer center’s senior vice president and chief risk officer, establishes some new limits the organization will put in place on its leaders.

The five highest-ranking roles will not be permitted to serve on boards of external, for-profit health- or science-related companies, the memo stated. These roles are the chief executive, chief operating officer, chief financial officer, physician-in-chief and director of MSK.

However, these five leaders can be exempt from the ban if they provide a compelling institutional reason for board service and obtain approval from the executive committee of MSK’s board of managers, according to the document.

Another new policy will limit the relationship with for-profit spin-off companies that MSK officers can have. MSK officers cannot serve on boards of spin-off companies, and the Board of Overseers and Managers cannot invest in or serve on these boards.”  (D)

“Top officials at Memorial Sloan Kettering Cancer Center repeatedly violated policies on financial conflicts of interest, fostering a culture in which profits appeared to take precedence over research and patient care, according to details released on Thursday from an outside review.

The findings followed months of turmoil over executives’ ties to drug and health care companies at one of the nation’s leading cancer centers. The review, conducted by the law firm Debevoise & Plimpton, was outlined at a staff meeting on Thursday morning.

It concluded that officials frequently violated or skirted their own policies; that hospital leaders’ ties to companies were likely considered on an ad hoc basis rather than through rigorous vetting; and that researchers were often unaware that some senior executives had financial stakes in the outcomes of their studies.

In acknowledging flaws in its oversight of conflicts of interest, the cancer center announced on Thursday an extensive overhaul of policies governing employees’ relationships with outside companies and financial arrangements — including public disclosure of doctors’ ties to corporations and limits on outside work…

Scott Stuart, chairman of the cancer center’s Boards of Overseers and Managers, said in an emailed statement: “We took a deep and honest look at what went wrong at our own institution, examined what was occurring in the wider cancer research community, and are putting in place best practices that will not only allow us to learn from our mistakes, but will contribute to best practices for the wider research community.”..

The policy changes that Memorial Sloan Kettering announced on Thursday include the creation of a board committee to focus on overseeing conflicts, an existing hospital policy that the law firm learned had not been carried out.

The hospital also said it would disclose financial interests of faculty members and researchers on its website and create a more centralized review of conflicts between employees’ work at the hospital and their outside duties.

Other changes included new limits on how income is distributed from research discoveries that originate at Memorial Sloan Kettering, and regular audits to ensure the hospital is complying with its own rules. The cancer center reinforced its earlier statements that many profits from outside work should flow back to M.S.K. research.” (E)

“Dr. José Baselga, who resigned his position as the top doctor at Memorial Sloan Kettering Cancer Center after failing to disclose millions of dollars in payments from drug companies, is now going to work for one of them.

AstraZeneca, the British-Swedish drug maker, announced on Monday that it had hired Dr. Baselga as its head of research and development in oncology, a newly created unit that reflects the company’s shift toward cancer treatments, one of the hottest areas in the drug industry.

In a statement, AstraZeneca’s chief executive, Pascal Soriot, described Baselga as “an outstanding scientific leader.” “José’s research and clinical achievements have led to the development of several innovative medicines, and he is an international thought leader in cancer care and clinical research,” he said…

In December, the American Association for Cancer Research said that Baselga, at its request, had resigned his post as one of two editors in chief of its medical journal Cancer Discovery because he did “not adhere to the high standards” of conflict-of-interest disclosures that the group expects of its leaders. Some of his omissions involved articles that were published in Cancer Discovery while he was an editor in chief.” (F)

“Two more members of the University of Maryland Medical System’s board of directors have resigned amid intense scrutiny over the system’s contracting practices — and as the hospital network announced a “comprehensive review” of its business deals.

Stephen A. Burch, chairman of the University of Maryland Medical System board of directors, said Tuesday that he has accepted the resignations of board members John W. Dillon and Robert L. Pevenstein.

 “I take very seriously the concerns raised regarding Board members that have business relationships with UMMS,” Burch said in a statement. “Addressing this issue is of the highest priority for me and the organization. There is nothing more important than the trust of those who depend on our leadership.”

Dillon reported in both 2017 and 2018 that his health care consulting firm, Dillon Consulting, generated more than $150,000 a year through a contract with the system for “capital campaign and strategic planning.” He reported the contract was paying his firm $13,000 a month.

Pevenstein, the founder of technology companies, reported that in 2017 his firms pulled in more than $150,000 through system contracts, including more than $108,000 in pay for himself. In 2018, Pevenstein reported his son also made more than $100,000 from the system.

In tax forms, Maryland hospital system labeled book purchase from Baltimore mayor a ‘grant’ to city schools

The resignations follow Baltimore Mayor Catherine Pugh stepping down from the board Monday. Pugh resigned from the system’s board of directors as Baltimore school officials acknowledged that 8,700 copies of children’s books the medical system purchased from her are sitting unread in a warehouse.

The three departures from the board came after The Baltimore Sun reported nine members of the University of Maryland Medical System’s Board of Directors have business deals with the hospital network that are worth hundreds of thousands to millions of dollars each.

Board chair Burch said Tuesday he also has asked board members who currently have relationships with the medical system to immediately take a voluntary leave of absence during a review of the system’s governance practices. Those members are: August J. Chiasera, Francis X. Kelly, James A. Soltesz and Walter A. Tilley Jr…

Medical system CEO Robert Chrencik has said some of the contracts went through a competitive bidding process, while others did not. The medical system has thus far declined to release a list detailing which of the deals went through a bidding process.” (G)

“The president and chief executive of the University of Maryland Medical System will take a leave of absence amid a growing scandal surrounding its board of directors, several of whom have profited from contracts with the hospital network they oversee.

Robert A. Chrencik, who has led the system since 2008, will be on leave beginning Monday, board chairman Stephen A. Burch announced Thursday. Burch said the board asked Chrencik to step aside and unanimously agreed at an emergency meeting Thursday to engage an independent accounting and legal firm to conduct an audit of the board’s contracts.

Several of the board’s 27 members — including Baltimore Mayor Catherine Pugh (D), who resigned this week from the board — have had business deals with the hospital system they oversee, in some cases worth hundreds of thousands of dollars. The deals, first reported last week by the Baltimore Sun, have been sharply criticized by Gov. Larry Hogan (R) and the Democratic leaders of the General Assembly.” (H)

Several of Maryland’s largest hospitals engage in business transactions with members of their governing boards while avoiding — for the most part — the type of political dealings that ensnared the University of Maryland Medical System in management turmoil this week.

The medical system has faced intense scrutiny since The Baltimore Sun revealed last week that a third of its 27-member board of directors have business dealings with the health care network…

The Baltimore Sun’s review of state disclosure records and federal tax forms for MedStar Health, LifeBridge Health, Mercy Medical Center, Greater Baltimore Medical Center and St. Agnes Hospital showed all have some dealings with board members.

GBMC said it always uses competitive bidding when awarding contracts.

LifeBridge Health officials said in a statement that board members with “conflicts may be required to be recused from any discussion where the potential conflict may influence their vote and are recused from any vote where a conflict may exist.” In addition, they said, an “audit and compliance committee also oversees conflicts of interest to ensure that there is no undue influence on any contract or vote.”

MedStar Health, which has seven hospitals in Maryland, reported business transactions with board members at five of its hospitals: Franklin Square Medical Center, Good Samaritan Hospital, Union Memorial Hospital and Harbor Hospital in the Baltimore area and St. Mary’s Hospital in Leonardtown in Southern Maryland.

Dr. P. Justin Tortolani, who serves on Union Memorial Hospital’s board and is director of MedStar’s spine program, reported receiving royalties of nearly $155,000 last year from contracts with two companies he is associated with.

At LifeBridge, relationships ranged from catering services with no reported value provided by Miss Shirley’s owner David Dopkin, a Sinai Hospital of Baltimore board member, to $9.2 million in leasing and construction services from the company of Thomas Obrecht, who serves on the boards of LifeBridge Health and Northwest Hospital Center Inc. In an email, Obrecht said he joined the board to use his experience in business and real estate to help guide “an organization focused on helping people in Baltimore and across Maryland.”.. (I)

“Legislation to overhaul the University of Maryland Medical System board was amended to require all current board members be fired.

The bill has bipartisan support and has significantly changed since it was first introduced. The measure, as amended, is headed to the House floor.

A House committee voted unanimously Friday in favor of legislation to completely overhaul the UMMS board. The board remains under fire following reports nine of its 30 members benefited from business deals with the hospital system, including a children’s book contract with Mayor Catherine Pugh.

Pugh returned $100,000 she made in profits, resigned from the UMMS board and recently made a public apology.

The legislation calls for the termination of all the current board members.

“They will be terminated in two different batches, so that we separate some in June and some in October,” House Health and Government Operations Committee Chairwoman Shane Pendergrass said.

The committee adopted an amendment mandating that no elected officials can serve on the board. Committee members paid close attention to ways to find out how these no-bid contracts happened…

The bill covers much ground, including limiting the number of board members to 25, prohibiting members from using their position for private gain and prohibiting sole source contracts. Financial disclosure statements and notification of any potential conflicts of interest would become a requirement by law.” (J)

“On the last day of Maryland’s General Assembly session, lawmakers gave final approval to sweeping legislation that would reform the University of Maryland Medical System’s board of directors amid revelations of single-source contracts for some board members.

The legislation — which comes after Baltimore Sun reporting sparked an outcry over the board’s practices, including a $500,000 deal to buy Mayor Catherine Pugh’s self-published “Healthy Holly” books — would bar no-bid contracts for board members, force all members to resign and reapply for their positions (if they want to return), and mandate an audit of contracting practices.

By a vote of 46-0, Maryland’s senators approved the legislation sponsored by Baltimore Democratic Sen. Jill P. Carter.

The bill now goes to Republican Gov. Larry Hogan for his consideration; he supports reforms for UMMS. (K)

“After weeks of mounting pressure, Mayor Catherine Pugh of Baltimore resigned on Thursday amid a widening scandal involving hundreds of thousands of dollars worth of children’s books that she wrote and that the University of Maryland Medical System paid for while she was serving on its board of directors.

Her resignation comes days after the Baltimore City Council proposed amending the city charter to make it possible to remove her, and after the F.B.I. raided her two homes and her office at City Hall…” (L)

“Robert A. Chrencik, president and CEO of Baltimore-based University of Maryland Medical System, has resigned, effective April 26, according to the Baltimore Sun.

The health system’s board placed Mr. Chrencik on a leave of absence March 25, as a scandal unfolded involving board members profiting from contracts with hospital networks they oversee.” (M)

“The University of Maryland Medical Center has requested a $75 million rate increase from state regulators, a nearly 5 percent increase.

The request was made before news broke of the University of Maryland Medical System’s inside deals with its board members.

Since then, Catherine Pugh resigned her position on the board and as mayor of Baltimore, and the system’s CEO Robert Chrencik stepped down.

“The rate increase requested by UMMC is necessary to provide funding for ongoing investment in operations and mission-driven goals – vital initiatives that enable the hospital to deliver first-class care to our patients,” a UMMS spokesperson said in a written statement. “Ultimately, this is about UMMC being able to meet the complex needs of our patients while continuing to serve as a safety net provider for the West Baltimore community.”

State Sen. Jill Carter, (D-Baltimore City) said the timing of the request could not be worse.

“Right now, of course, there’s going to be a perception that this rate massive rate increase somehow is a result of the self-dealing,” Sen. Carter said. “Maybe they should hold off until some of the investigations are done or the internal or external audits are done, that the legislation called for that.”” (N)

“The chairman of the embattled University of Maryland Medical System board of directors announced his resignation Tuesday — along with two other board members — as an additional contract with one of the departing board members was revealed.

Board Chairman Stephen Burch, who attended a contentious meeting in March with Republican Gov. Larry Hogan and Democratic state Senate President Thomas V. Mike Miller over the board’s contracting practices, announced his resignation effective July 1.

Burch, who also served as a member of Democrat Catherine Pugh’s transition team when she became mayor of Baltimore, was joined in resigning from the UMMS board by Kevin O’Connor and Dr. Scott Rifkin.

O’Connor’s resignation is effective July 1, while Rifkin’s takes effect immediately.

The system said in a statement that Rifkin and the hospital network had an “active agreement” in which his company “provides software for a pilot program designed to reduce hospital readmissions.”..

Federal, state and local investigations are underway.

System President and CEO Robert Chrencik — who was paid $4.3 million in total compensation in 2017 — resigned last month. Pugh resigned last week from her office as mayor of Baltimore.” (O)

“Former Baltimore mayor Catherine Pugh and her colleagues on the University of Maryland Medical System board were not the only ones who profited from business deals with the hospitals they oversaw.

At least two dozen people who sit on boards of smaller, affiliated institutions in the massive system had contracts with those institutions, in some cases worth hundreds of thousands of dollars annually, according to financial disclosures.

The contracts show the pervasiveness of the kinds of deals that led to Pugh’s resignation as mayor this month and, lawmakers say, point to challenges that remain as they grapple with how to make the system more accountable.

Among those who had deals with hospitals they oversaw were a Harford County veterinarian who has made nearly $3 million since 2013 from rental leases; a vascular surgeon whose Bel Air practice made $2.4 million since 2013; and the former president of an ambulance company whose contracts were worth at least $1.3 million since 2010.

Michael Schwartzberg, a spokesman for UMMS, said those relationships are “all appropriate and consistent with fair market value.” Some of the contracts predated members’ service on the boards, he said; others were signed after members joined their respective boards. He said some deals were competitively bid and did not provide information about others.

There were at least two dozen local board members who had contracts with the hospitals they oversaw, according to the disclosure forms, which in some cases listed the specific amount their contracts were worth but in others required a range, such as “greater than $100,000.” The commission said it was missing forms from UM Rehabilitation & Orthopaedic Institute.” (P)

Gov. Larry Hogan has decried contracts that board members of the University of Maryland Medical System held with the organization they were tasked with overseeing and promised to “clean house.”

But state law long has called for housecleaning along the way, specifying that board members can’t serve more than two consecutive five-year terms. Hogan (R) and his predecessors, who appoint the board members, allowed some to stay well past a decade.

A spokesman for the governor, who took office in 2015, said Thursday that term limits will be enforced from now on.

“These practices were handed down from both Republican and Democratic administrations,” spokesman Michael Ricci said in an email. “Governor Hogan is working to put an end to them so we can help restore public trust in UMMS.”

Members who lingered on the board include former state senator Francis X. Kelly, whose insurance company held some of the largest contracts that are under review as part of a broad investigation of the hospital board.

Kelly, who did not respond to requests for comment, joined the board in 1986 and most recently was reappointed by Hogan in 2016. He took a voluntary leave of absence from the board while auditors probe the contracts.” (Q)

“The University of Maryland Medical System (UMMS) Board of Directors reviewed and voted unanimously to approve a new Conflict of Interest Policy. This is another milestone as the organization continues to improve Board governance and oversight while managing conflicts of interest appropriately. The new Policy is adherent to recently passed Maryland legislation and is effective July 1, 2019.

“This is another major step forward as we improve Board governance, change corporate culture and put UMMS on a strong path forward,” said Interim President and CEO John Ashworth. “We thank the legislators for their work in guiding this policy during the session and helping us focus on providing a sound, long-term foundation for a sustainable, effective Board.”

Of note, the Policy includes:

A prohibition on sole source contracting with any UMMS Board member

Requirements for the recusal of non-independent Board members from certain deliberations and decision-making activities

Provisions that restrict relevant Board leadership positions to independent Board members

Detailed procedures for the disclosure of interests by UMMS Board members, officers and management level employees

The process for identifying and addressing conflicts of interest

The process for handling violations of the Conflict of Interest Policy

A requirement that every Board member attest to compliance with the Conflict of Interest Policy

The new Conflict of Interest Policy was delivered to Governor Hogan and the presiding officers of the Senate and House of Delegates today, as required by Maryland law. The Policy will also be presented to the UMMS affiliate boards for review and approval within 60 days.” (R)

“Four top executives at the University of Maryland Medical System have resigned amid investigations into accusations of self-dealing among the hospital network’s board members, the system announced Thursday.

Those resigning are Megan Arthur, the system’s primary lawyer; Jerry Wollman, the chief administrative officer; Christine Bachrach, the system’s chief compliance officer; and Keith Persinger, the chief performance improvement officer.” (S)

“Maryland Gov. Larry Hogan named Wednesday his initial batch of new appointees to the troubled board of directors at the University of Maryland Medical System, the first step toward reorganizing the board following a scandal over board members having lucrative contracts with the 13-hospital system.

The volunteer board came under fire in March when The Baltimore Sun reported a third of its 30 members or their companies had deals with the hospital system, some of which were not competitively bid. They included then-Mayor Catherine Pugh of Baltimore, a Democrat who made hundreds of thousands of dollars selling children’s books in a sole-source arrangement with UMMS. She later resigned from the board and as mayor amid multiple investigations into the book deals.

In a separate action Wednesday, the hospital board elected new leadership from among its current members and invited four members who voluntarily took leaves of absence to return.

The new appointments to the board are required under a law state legislators passed this year that mandated several reforms at the hospital system. All previously appointed board members must step down by the end of the year, to be replaced or reappointed by the governor.

All new board members are subject to confirmation votes by the state Senate, but can serve until the Senate votes on their appointments. They will take office July 1.

Board members can serve up to two five-year terms. In the past, board members often stayed past the end of their terms if a governor didn’t replace them.

“I pledged that I would appoint new board members who will serve with integrity and accountability, and today, I am delivering on that promise,” Hogan, a Republican, said in a statement. “This is another critical step as UMMS works to restore public trust.”

The medical system board met Wednesday morning and elected James “Chip” DiPaula Jr. as chairman and Alexander Williams Jr. as vice chairman. They’ll serve in those roles for the remainder of the year. Former Chairman Stephen A. Burch was among several board members who resigned amid the scandal.

DiPaula, who Hogan appointed to the board in 2016, is a former state budget secretary and chief of staff to then-Gov. Robert L. Ehrlich Jr., a Republican. DiPaula later founded an e-commerce firm.

Williams is a retired federal judge who has been tapped for other leadership roles, including chairman of the state’s Commission to Restore Trust in Policing and co-chairman of a commission on redistricting that drew up a proposed map for Maryland’s 6th Congressional District. Hogan appointed Williams to the hospital system board in 2015.

In a statement released by UMMS, DiPaula said members of the board “regret the actions and poor decisions which have jeopardized confidence in the system.”

The new board members nominated by Hogan are:

» Eliza Basnight, senior vice president of supply chain for the American Red Cross. Previously, she was chief of staff for the U.S. Mint under the Obama administration and head of the Center for Women Veterans at the U.S. Department of Veterans Affairs.

» Kathleen A. Birrane, an attorney with the firm DLA Piper who previously was the top lawyer for the Maryland Insurance Administration.

» Dr. Joseph Ciotola, health officer for Queen Anne’s County and medical director for that county’s Department of Emergency Services.

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» Matthew Clark, Hogan’s chief of staff. Clark will hold a seat that is reserved for the governor or the governor’s designee.

» Wanda Queen Draper, former director of the Reginald F. Lewis Museum of African-American History and Culture in Baltimore.

» Jason Frankl, senior managing director of FTI Consulting, where his work includes helping companies defend against activist investors and takeover attempts.

» Glenn T. Harrell, retired senior judge of the Maryland Court of Appeals.

» Dr. Joyce M. Johnson, a physician who retired from the U.S. Public Health Service, where she held the rank of rear admiral and was director of health for the U.S. Coast Guard.

» Bonnie Phipps, senior vice president and group operating executive for Ascension Health, a Catholic health system that operates in 21 states and the District of Columbia, including Southwest Baltimore’s St. Agnes Hospital, where she was president from 2005 to 2015.

» Joseph T.N. Suarez, a director at Booz Allen Hamilton, a business consulting firm.

» John T. Williams, chairman and CEO of Jamison Door Company in Hagerstown. He previously served as a newspaper and TV executive.

In addition to mandating a gradual replacement of the current board and requiring term limits, the new law banned no-bid contracts for board members and required a state audit of the hospital system’s contracting practices.” (T)

“Francis Kelly Jr., the former Maryland state senator whose insurance company benefited from contracts with the University of Maryland Medical System while he served on the hospital network’s board of directors , announced Friday that he will give up that seat.

“It has been a tremendous honor for me to have served on the UMMS Board for nearly 35 years, under six different Governors,” Kelly wrote in a resignation letter to board chairman Stephen Burch. “I have decided it is time to move on, and allow someone else the fantastic opportunity of serving.”

Kelly and his sons, John and David, who served on UMMS-affiliated boards, took voluntary leaves of absence in April as probes were opened to review the health system’s contracts with businesses affiliated with board members.

In the resignation letter, Kelly said his sons have also decided not to return to their board positions.

The UMMS board voted Wednesday to ask Kelly and three other members on leave to rejoin the board, after an outside probe of the contracting scandal placed most of the blame with former hospital system chief executive Robert Chrencik, who resigned in April.

Several state lawmakers raised concerns about the board’s decision, however, and said board members who had contracts with the system should not return to the board.

“[W]e feel that the best way to serve the system and its affiliated hospitals at this time is not come back onto these boards,” Kelly wrote in a letter to John Ashworth III, the interim president and chief executive.

Kelly & Associates Insurance Group has had multimillion-dollar transactions with the medical system since at least 2005, the first year for which financial disclosure records are available, handling more than $100 million in premiums.” (U)

“A review of contracts the University of Maryland Medical System had with members of its board of directors and their companies revealed more no-bid and self-dealing practices — including that executives pressured staff to use board members’ products — and blamed former CEO Robert Chrencik and other system leaders.

“Many of these contracts were not competitively bid, were not declared to be necessary by the board or senior leaders, and, if vetted, were without full transparency to the entire board,” concluded the review by Nygren Consulting, which was hired and paid by the 13-hospital network.

The report released Wednesday reviewed business deals with nine board members and found:

» Seven of nine of the deals were entered into without competitive bids;

» In four cases, the board of directors was not properly informed of the business relationships;

» The board member who was in charge of auditing financial dealings himself had a no-bid deal;

» In at least two instances, staff felt pressured to promote the use of software from companies that would have benefited individual board members financially.

The report focused its harshest criticism on deals with four board members that hospital officials described as “personal services” contracts: Former Baltimore Mayor Catherine Pugh, who was paid $500,000 for her self-published children’s books; Robert Pevenstein, a consultant who was paid more than $100,000 a year; John W. Dillon, who was paid $892,000 since 2013 for providing “healthcare consulting services;” and Dr. Scott Rifkin, who runs a health care software company.

The system commissioned the review in response to revelations in The Baltimore Sun, beginning in March, about the contracting practices.

“These arrangements reflect a pattern by management of making decisions without full board approval,” the report found of members’ contracts. “The board was insufficiently informed and, for the most part, had no specific advance knowledge that would have caused the board to consider alternatives that would have forestalled or eliminated perceived and real self-dealing.” “ (V)

“The report on self dealing among UMMS board members comes after the departures of the system’s CEO and board members, including former Baltimore Mayor Catherine Pugh. Controversy arose over board members — including Pugh — who made money in business deals with the system.

Regarding Pugh’s “Healthy Holly” book arrangement, Nygren wrote, “Our review has determined that management did not present the book purchases to the board or any committee for prior approval, as required by then-in-effect Conflict of Interest policies, and the purchase was not subject to any competitive bidding process.”

The report concluded that then-CEO Robert Chrencik “agreed to enter into an agreement with Ms. Pugh without consent of the board.”

Between 2010 and 2018, UMMS agreed to pay a total of $500,000 for the self-published books Pugh authored. She repaid $100,000.

The report also investigated other former board members and found similar violations of board policies.

UMMS said in a statement that the report details “both management and various board members share responsibility for the lack of transparency and strong, modern governance policies that resulted in improper relationships.”

UMMS said the following recommendations have been or will be adopted:

A new, comprehensive Conflict of Interest Policy was authored by Nygren and accepted by the Board of Directors. The policy was delivered to Maryland’s governor, Senate president and Speaker of the House on May 31.

A Governance Committee will be chartered as a permanent Committee of the Board, and tasked with overseeing all board practices, policies and relationships. All appropriate guiding documents will be authored.

A new, research-based “competency” model will be implemented to ensure the makeup of the board is determined based on two levels of competencies: those required of each individual member, and those required by the Board as a whole. This will ensure the board is representative of the communities it serves and has the experience and skills necessary to advance the organization’s strategic direction and mission.

The education process related to disclosures and conflicts will be redesigned and will include an official “Code of Conduct” to ensure all board members and senior management are acutely aware of compliance requirements moving forward.

Board committees will be restructured so chair positions of the Finance Committee and the Audit and Compliance Committee are held by separate individuals, and the chair of the latter maintains no financial or contractual relationship with the organization.

“While Nygren confirmed that outside business interests between a board member and a nonprofit Board of Directors are not uncommon or illegal, great care and caution must be given to ensure there is proper vetting and no real or perceived conflicts of interest. To that end, any proposed professional services agreements with board members will be revealed to the full board, carefully vetted with the Board’s Audit and Compliance Committee and reported to the Compliance Officer. The new Conflict of Interest Policy will be strictly adhered to in all cases. Additionally, the system will no longer allow any board member to engage in a personal services agreement, regardless of circumstance,” the UMMS statement read.”  (V)

“The recent ethical lapses within the University of Maryland Medical System and its board have been appalling, with much of the focus on former Baltimore Mayor Catherine Pugh, state legislation passed to improve board oversight and resignations of certain board members.

Scant attention has been paid, however, to an elephant in the room: Most of the board members were, as required by statute, appointed by Gov. Larry Hogan, with some improperly reappointed beyond the two-term legal limit. And many of them, including several of the 11 newly appointed board members, donated to his campaign as individuals or through affiliated businesses — some in apparent excess of campaign finance limits — for a combined total of over $115,000.

While donors receiving appointments isn’t inherently unlawful, it undermines public confidence, particularly when combined with the fact that some of these donor-appointees, including former state Sen. Frank Kelly Jr., appear to have received generous “insider” contracts from UMMS.

And, despite the governor’s professed outrage over UMMS’ dealings, he recently vetoed an important bill that would improve transparency and strengthen accountability of the Governor’s Appointments Office, whose primary purpose is to vet political appointees to represent Mr. Hogan on boards and commissions and in a small handful of high-level leadership positions in state agencies.

The governor prefers to point the finger at UMMS for its failed internal controls, but he, too, should have known that many of his appointees had business dealings with UMMS. His appointments office requires all appointees to complete a form that probes for conflicts of interest and problematic affiliations.

In examining the governor’s campaign finance records, publicly available from the State Board of Elections, I found at least eight UMMS board members — Stephen Burch, R. Alan Butler, John Coale, James “Chip” DiPaula Jr., Barry Gossett, Mr. Kelly, Robert Pevenstein and Walter Tilley Jr. — who donated to Governor Hogan the $6,000 maximum permitted by law.

Businesses apparently connected to Mr. Tilley, James Soltesz, Mr. DiPaula and Robert Rauch also contributed a combined $16,000 to Governor Hogan’s campaign.

Four board members or related businesses appear to have contributed above the $6,000 legal limit in total over a four-year period:

Kelly Integral Solutions LLC, contributed $11,000 — all while Kelly & Associates received a lucrative UMMS contract reportedly worth $16 million. (Mr. Kelly is among those who recently announced his resignation from the board.)..

In order to boost accountability, and in response to numerous complaints of politicization of the state workforce, I introduced and passed legislation (Senate Bill 751) during this past session that would increase transparency regarding the information gathered by the appointments office by requiring annual aggregated reporting back to the General Assembly. The governor vetoed it.” (X)

“For its report, Nygren reviewed system documents and interviewed about 60 people, including current and former board members, executives and staff. Here are some of the firm’s key findings:

1) Blaming the old boss.

Chrencik was blamed for cutting deals with individual board members without the full board’s approval. In four cases, the board was not properly informed of the deals…

2) Most deals with board members weren’t competitively bid.

Seven of nine of the deals with individual board members were entered into without competitive bids…

3) Who’s doing oversight?

The board member who was in charge of monitoring financial dealings himself had a no-bid deal. Robert Pevenstein, who was chairman of both the audit and finance committees, had several arrangements with the system, including for-profit relationships for the firms Profit Recovery Partners and Optime, as well as a consulting deal. He was paid more than $100,000 a year…

4) Staff felt uncomfortable.

In at least two instances, UMMS employees felt pressured to promote the use of software from companies that benefited individual board members financially…”  (Y)

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